A Gulf company that starts selling into India meets Goods and Services Tax (GST) early. Sometimes the Indian customer handles the tax and the foreign company never registers. Sometimes the foreign company must register before its first sale and file every month. The difference depends on what you sell, to whom, and whether you have any presence in India.
This guide explains the GST rules that apply to foreign companies, with a focus on businesses from the Gulf (GCC) entering India: when registration is required, the special rules for non-residents and online services, reverse charge, place of supply, invoicing and returns. It is general guidance based on the Central Goods and Services Tax (CGST) Act, 2017, the Integrated Goods and Services Tax (IGST) Act, 2017 and the rules under them. Confirm your own position with a GST practitioner before you sign your first Indian contract.
Four ways a foreign company meets Indian GST
Most foreign businesses fall into one or more of four situations. Start by working out which ones apply to you.
| Situation | Who pays the GST | Does the foreign company register? |
|---|---|---|
| Services supplied from abroad to a registered Indian business | The Indian recipient, under reverse charge | No, in the ordinary case |
| Online services (OIDAR) supplied from abroad to unregistered persons in India, such as consumers | The foreign supplier | Yes, a single registration under the simplified scheme |
| Occasional taxable supplies made in India with no fixed place of business there | The foreign company, as a non-resident taxable person | Yes, before it starts, with an advance deposit |
| Business through an Indian subsidiary or branch | The Indian entity | The Indian entity registers once the threshold is crossed or a compulsory case applies |
Goods are handled separately. Integrated tax on goods imported into India is generally levied and collected at the border under section 3 of the Customs Tariff Act, 1975, at the point when customs duties are levied.
When is GST registration required?
There are two kinds of trigger.
The turnover threshold. Under section 22 of the CGST Act, a supplier must register in each State or Union territory from which it makes taxable supplies once its aggregate turnover in a financial year exceeds ₹20 lakh. The figure is ₹10 lakh in some special category States. At a State's request, the government can raise the threshold to up to ₹40 lakh for suppliers engaged exclusively in supplying goods.
Compulsory registration, whatever the turnover. Section 24 lists cases where the threshold does not apply. The ones that matter most for foreign businesses are:
- non-resident taxable persons making taxable supplies;
- persons who must pay tax under reverse charge, which catches an Indian subsidiary paying tax on services from its Gulf parent;
- every person supplying online information and database access or retrieval services from outside India to a person in India other than a registered person;
- every person supplying online money gaming from outside India to a person in India;
- persons making inter-State taxable supplies, and persons selling through an e-commerce operator that collects tax at source.
The non-resident taxable person rules
The CGST Act defines a non-resident taxable person as someone who occasionally undertakes transactions involving supplies of goods or services in India, as principal, agent or otherwise, but has no fixed place of business or residence in India. Selling goods from a stall at an Indian trade fair, or delivering a short project on the ground, can put a Gulf company in this category.
The GST Network's FAQs set out what registration involves:
- Apply at least five days before you start business in India.
- Appoint an authorised signatory resident in India with a valid PAN, an Indian mobile number and an e-mail address. The foreign company itself does not need a PAN; its passport number or its home-country tax identification number will do.
- Identify a place of business in the State where you will register, with proof of that address.
- Deposit the tax in advance. You pay an amount equal to your estimated tax liability for the registration period. There is no fixed figure; it is based on your estimated turnover.
- Plan around 90 days. Registration is valid for the period you apply for or 90 days from the effective date, whichever is earlier. You can extend it once, for another 90 days, if you apply before it expires. After that, you must register as a normal taxpayer.
A registered non-resident taxable person files Form GSTR-5. Where registration runs for more than a month, a monthly return is due by the 13th of the following month, or within seven days of closing the business, whichever is earlier. For the period of registration as a whole, the return is due within seven days after the registration expires.
OIDAR: online services sold to Indian customers
Online information and database access or retrieval (OIDAR) services are services delivered over the internet or an electronic network that cannot be supplied without information technology. The IGST Act lists examples: advertising on the internet, cloud services, e-books, films, music and software delivered online, providing data or information electronically, online digital content and digital data storage.
The rules turn on the customer:
- Unregistered customers in India. Since 1 October 2023, a non-taxable online recipient means any unregistered person in India receiving OIDAR services, including a person registered only to deduct tax at source. For these customers, the supplier outside India pays the integrated tax itself. It takes a single registration under the simplified registration scheme. If it has no physical presence or representative in India, it may appoint a person in India to pay the tax on its behalf.
- Registered business customers. The Indian business pays the tax under reverse charge, and the foreign supplier does not charge Indian GST. A supplier already registered for its consumer sales also reports these business supplies in its monthly return.
Where is the customer? For OIDAR, the place of supply is the location of the recipient. A customer is treated as located in India if any two of seven non-contradictory conditions are met: the address the customer gives online, the country where the payment card was issued, the billing address, the IP address of the device, the bank holding the paying account, the country code of the SIM card, and the location of the fixed landline used.
Platforms. Where an intermediary outside India arranges or facilitates the supply, it is treated as the supplier unless it meets four conditions: its invoice identifies the actual supplier, it does not collect or process the payment, it does not authorise delivery, and it does not set the terms of the supply.
OIDAR suppliers file Form GSTR-5A by the 20th of the month after each month. The GST Network's FAQs make the return mandatory even for a month with no business, so file nil returns too.
Reverse charge: when the Indian customer pays
Section 5(3) of the IGST Act lets the government require the recipient, not the supplier, to pay tax on notified supplies. Notification No. 10/2017-Integrated Tax (Rate) uses that power for imported services. On any service supplied by a person in a non-taxable territory to a person in India, other than a non-taxable online recipient, the whole of the integrated tax is paid by the recipient under reverse charge.
In practice, for a Gulf consultancy, engineering firm or software company billing Indian businesses:
- your invoice carries no Indian GST;
- your Indian customer must be registered, because anyone liable to pay tax under reverse charge must register;
- the customer issues its own invoice for the supply, because it received it from a supplier who is not registered, and a payment voucher when it pays you.
Intercompany services need care. Under Schedule I of the CGST Act, the import of services from a related person, or from any of your other establishments outside India, in the course of business, is a supply even without consideration. If a Gulf parent provides management, IT or shared services to its Indian subsidiary, the subsidiary has a reverse charge position to work through, even if no invoice is raised.
Place of supply basics
Place of supply decides whether a transaction is taxed in India and, inside India, which State's tax applies. When either the supplier or the recipient is outside India, section 13 of the IGST Act applies.
| Type of service | Place of supply |
|---|---|
| Most services (the default rule) | Location of the recipient; if that is not available in the ordinary course of business, the location of the supplier |
| Services on goods the recipient must make physically available | Where the services are actually performed |
| Services that need the recipient to be physically present | Where the services are actually performed |
| Services directly related to immovable property, including hotel accommodation | Where the property is located |
| Admission to, or organisation of, events such as conferences, fairs and exhibitions | Where the event is held |
| Banking services to account holders, and hiring of transport for up to one month | Location of the supplier |
| OIDAR services | Location of the recipient, using the two-of-seven test |
Two points matter for Gulf companies. First, services for an event held in India, such as admission to or organisation of a trade fair, have their place of supply in India even when the customer is a Gulf company. Second, the Finance Act, 2026 omitted the special rule that placed intermediary services at the supplier's location, so intermediary services now follow the default rule. An Indian sales agent paid commission by a Gulf principal should review whether its service can now be treated as an export.
If your Indian entity will provide services back to you. An export of services must meet five conditions in section 2(6) of the IGST Act: the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is received in convertible foreign exchange or in Indian rupees where the RBI permits, and the two are not merely establishments of a distinct person. That last condition is the one to check if you plan an Indian branch rather than a subsidiary.
Invoicing
Rule 46 of the CGST Rules lists what a tax invoice must contain. The main items are:
- the supplier's name, address and GSTIN;
- a consecutive serial number of up to 16 characters, unique for the financial year, and the date of issue;
- the recipient's name, address and GSTIN if registered;
- the HSN code for goods or services, a description, and the taxable value;
- the rate and amount of tax, split into central, State, integrated or Union territory tax and cess;
- the place of supply with the State's name, for inter-State supplies;
- whether the tax is payable on reverse charge;
- a signature or digital signature.
For OIDAR services to an unregistered customer, the invoice must show the customer's State, whatever the value. Export invoices carry a prescribed endorsement stating whether the supply is made on payment of integrated tax or under bond or letter of undertaking without it. Businesses above a notified aggregate turnover must issue invoices in the prescribed electronic manner, with a QR code carrying the Invoice Reference Number.
Returns and deadlines
| Who | Return | When |
|---|---|---|
| Indian subsidiary or branch, monthly filer | Form GSTR-3B | By the 20th of the following month |
| Indian subsidiary or branch, quarterly filer | Form GSTR-3B | By the 22nd or 24th of the month after the quarter, depending on the State |
| Non-resident taxable person | Form GSTR-5 | By the 13th of the following month, or within 7 days of closing the business, whichever is earlier |
| OIDAR supplier outside India | Form GSTR-5A | By the 20th of the following month, including nil returns |
A regular taxpayer also files Form GSTR-1, the statement of outward supplies from which GSTR-3B is partly filled. Build all of these into one compliance calendar from the first month; our guide to the 13-week cash-flow forecast shows how to put GST payment dates into a weekly cash plan.
Practical steps for a Gulf company entering India
- Map every revenue stream to one of the four situations. One business can sit in several at once.
- For business customers, set up reverse charge cleanly. Collect each customer's GSTIN, invoice without Indian GST, and state in your contract that the customer accounts for the tax.
- For online sales to consumers, register before the first sale. Set up your checkout to capture the evidence for the two-of-seven location test.
- For on-ground supplies, register as a non-resident at least five days before you start. Budget for the advance deposit and the 90-day validity.
- For an Indian subsidiary or branch, design the GST set-up with the entity. Register in each State you supply from, map intercompany services for reverse charge, and if the Indian entity will export services back to the Gulf, check the five export conditions. Our complete guide to India market entry covers entity choice and setup, and the India market entry white paper covers the tax and legal detail.
An illustrative example
This is an illustrative profile, not a client case. A Dubai-based software company sells cloud subscriptions in India to two groups: registered small businesses and unregistered freelancers. For the businesses, it invoices without Indian GST and the customers pay integrated tax under reverse charge. For the freelancers, cloud services are OIDAR and the customers are non-taxable online recipients, so the company takes a simplified registration, charges and pays integrated tax itself, and files GSTR-5A every month.
A year later it forms an Indian subsidiary to provide customer support. The subsidiary registers in its home State, pays integrated tax under reverse charge on the services it receives from the Dubai parent, and files GSTR-3B monthly. Before billing the parent for support work, it tests that work against the five export conditions.
Common mistakes
- Charging nothing to Indian consumers on digital services. Online services to unregistered persons in India need a registration and Indian tax.
- Treating non-resident registration as annual. It runs for 90 days at most, extendable once.
- Ignoring free intercompany services. Services from a related person or your own establishment outside India are a supply even without consideration.
- Skipping nil returns. GSTR-5A is due every month, including months with no sales.
- Assuming one registration covers India. Registration is by State.
Where Stratisian fits
Stratisian is an execution-led management consulting firm for owner-led businesses in India and the Gulf (UAE, Saudi Arabia and Qatar). Our market entry work covers entry structure, entity incorporation with FEMA, RBI and FDI compliance, and accounting and tax compliance set-up, working alongside your GST practitioner. Our India-Gulf corridor guide explains how entry works in both directions.
Every engagement starts with a free 30-minute call. The diagnostic is priced from ₹10,000 + GST (India) or $100 (overseas clients), and execution engagements are priced at 1% of topline revenue, billed monthly (conditions apply: scope, duration and final commercials are agreed in writing after the diagnostic). See our pricing page for details.
Investing in the other direction? Our guide to India's overseas direct investment rules covers what an Indian business must do when it sets up a company in the Gulf.